A Case More Important than Hobby Lobby?

July 10, 2014

The Obama administration only recently lost the Hobby Lobby case in front of the Supreme Court. But a case soon to be decided by the D.C. Circuit Court of Appeals, says George Washington University law professor Jonathan Turley, could pose a more fundamental challenge to Obamacare.

When the Affordable Care Act was drafted, the law contained incentives for states to create their own health insurance exchanges. One of those incentives was that the federal government would provide subsidies to enrollees who enrolled in health insurance exchanges "established by the state."

Yet, 34 states decided not to set up their own exchanges, leaving that task to the federal government. But if enrollees in those 34 states were not eligible for subsidies, too many Americans would be unable to afford the law's mandatory health insurance -- a problem which threatened to collapse the ACA. As a result, the White House unilaterally decided to ignore that part of the law, declaring that all enrollees were eligible for subsidies, even if they were in states that did not establish their own exchanges.

Halbig v. Burwell is the case challenging the administration's decision to grant subsidies to all enrollees. In defense, the White House argues that exchanges "established by the state" refers to all exchanges, including that established by the federal government.

The Court of Appeals will issue its decision soon. If the White House loses, Turley writes that enrollees across the United States will suddenly face higher insurance costs and potential exemptions from the mandate. Additionally, such a ruling would mean that the federal government has already paid billions of dollars in subsidies that it was not authorized to pay.